Leverage is 1) an action or advantage of using a lever; 2) In finance, the ratio of a company's loan capital to the value of its ordinary shares. Leverage is the method of using debt to finance an undertaking that will provide surpass returns - future profits will be many times more than the cost of borrowing. For many businesses, borrowing money can be more advantageous than using equity or selling assets to finance transactions. (Also, called as Gearing in the UK) (Refer to the Leveraged Buyout (LBO))
Related Definitions in the Project: The Commercial Definitions
